The availability of thin-film multichannel electrodes provides new possibilities for implantation and direct stimulation of the modiolar portion of the auditory nerve. Electrodes in direct contact with the auditory nerve should be functional at lower thresholds and might require fewer remaining neurons for stimulation compared to electrodes in the scala tympani. This strategy would also provide close contact with neural elements subserving a greater frequency range. Implantation of the eighth nerve may also be advantageous in profoundly deaf subjects who lack an implantable scala tympani. In this study we evaluated the effect of surgical implantation and chronic placement of a silicon substrate implant in the modiolar portion of the auditory nerve of the guinea pig. Of six chronically implanted ears, five showed changes limited to the loss of spiral ganglion cells in the canal of Rosenthal, immediately adjacent to the implant. The sixth ear showed more extensive cochlear alteration in a pattern suggestive of vascular injury. In separate acute experiments, implants were placed in the modiolar portion of the auditory nerve and electrophysiologic analysis was performed. Middle latency responses with good morphology were obtained at thresholds below those found with scala tympani implants. Input-output functions exhibited a plateau in response amplitude at stimulus levels below thresholds for seventh or vestibular portion of the eighth nerve. Further modifications of the modiolar portion of the auditory nerve electrode design will include development of an electrode interconnect that will allow chronic implantation with stimulation.